ombudsman news

issue 102

April/May 2012

money transfer

Transferring money from one account to another can be complicated, and it's inevitable that problems will sometimes arise. All money transfers - whether they take place online or over the counter - rely on the account details of the intended recipient being entered correctly. We see a significant number of complaints involving money being transferred to an unknown third party by mistake. In some cases the money can be recalled, but this relies on the consumer and the financial business acting quickly.

We also see problems arising because consumers do not feel well informed about the transfer process. Some transfers can happen very quickly and might be irreversible. In other cases, particularly when money is being transferred overseas, the money can take weeks to reach its destination. The overseas transfer process can be particularly complicated because intermediary banks usually have to be involved. And of course, when money is moving between countries, different exchange rates can lead to consumers receiving less money than they had expected.

Our online technical resource, "banking transfers, payments and cheques" contains information about how we deal with these complaints. This selection of case studies illustrates the wide range of complaints we are asked to deal with including:

a consumer losing out because the exchange rate changed during a delayed transfer;

a money transfer bureau that did not warn a consumer about the risks of passing on payment details;

Mrs F wanted to transfer £90,000 to her savings account in France. She wrote to her bank in the UK to ask them to transfer the money. A few days later, she received a letter from her bank's transfer department telling her that it had been unable to carry out the transfer. The letter provided a general helpline number and asked Mrs F to get in touch.

Over the next few days, Mrs F phoned the bank several times but was unable to reach the right department. So she made the one-hour round trip to her nearest branch where a member of staff was able to transfer the money straightaway.

Mrs F subsequently made a complaint to the bank, saying that the exchange rate had changed since she first requested the transfer - and that the bank's delay had caused her to lose out. The bank responded to the complaint, and told her that for security reasons, it had been unable to process the transaction without additional authorisation. It said that it would have attempted to contact Mrs F three or four times by phone, in line with its procedures.

Unhappy with this explanation, Mrs F referred her complaint to us.

complaint upheldWe accepted that the bank had wanted to contact Mrs F to confirm that the transfer request was genuine. After all, the transfer involved a substantial amount of money.

However, having considered all the evidence, we did not consider that the bank had done all it could to ensure that the transfer took place within a reasonable amount of time. Although the bank had accepted that Mrs F had phoned the number provided on its letter, it was unable to explain why it had been unable to put her through to the right department.

We therefore decided to uphold the complaint. We told the bank to pay Mrs F the difference between the money she had actually received and the money she would have received had the transfer been made on the date she received the bank's letter. In addition, we told the bank to pay £150 compensation for the inconvenience it had caused.

102/2complaint about money transferred overseas not reaching its destination promptly

Mr and Mrs R's son was travelling in South America for a few months and they instructed their bank to make an international money transfer to him. After a week, he had not received the money and Mr and Mrs R made enquiries with the bank.

They phoned the bank several times, but it could not explain why their money had not arrived. During the following weeks, Mr and Mrs R sent two letters to their local branch by registered post, but received no reply.

A month after the transfer had been requested, the money arrived in South America. Mr and Mrs R remained unhappy and made a complaint to the bank. They said that the bank had failed to carry out the transfer promptly and had not explained why it had been delayed.

The bank responded, saying that it had in fact made the transfer promptly - and that it was not responsible for the delay. It apologised for not having handled Mr and Mrs R's subsequent enquiries as efficiently as it could have done. Mr and Mrs R were still dissatisfied and referred their complaint to us.

complaint upheld in partWe explained to Mr and Mrs R that the process of transferring money overseas can be complicated - particularly when it is being sent outside the European Union. A UK bank usually has to send the money via one or more intermediary banks - sometimes called "correspondent" banks in the banking sector.

We looked at all the records relating to the transfer, including those of the intermediary bank. These showed that the money had been sent promptly to the intermediary bank for onward transfer to South America. In addition, it was clear that the intermediary bank had processed its part of the transfer promptly. It seemed that the delay had arisen at the receiving bank.

We were therefore satisfied that Mr and Mrs R's own bank had not caused a delay in the payment being sent. We pointed out that money transferred to some South American countries can often delayed due to requirements imposed by their governments.

However, we did not consider that the bank had handled the matter entirely well. It had been unable to answer Mr and Mrs R's questions over the phone and had not responded to their letters. We noted that the bank had apologised to Mr and Mrs R, but we told it to pay them £100 compensation for the inconvenience it had caused.

102/3complaint about a transfer not reaching its destination due to incorrect beneficiary details

Mr N owned a small, specialist business importing rugs and carpets. He went into the local branch of his bank and completed the forms instructing it to carry out an international transfer from his business account. The transfer subsequently failed, because the beneficiary details were incorrect - and the money was returned several weeks later. Unfortunately, Mr N did not get back as much as he had sent because of a change in the exchange rate.

Mr N made a complaint to his bank and asked it to cover his loss. He said that the bank must have made a mistake with the beneficiary details because he had made a similar transfer a week later that had gone through successfully.

The bank responded by saying that it had processed the transfer in line with Mr N's instructions, and that it was not responsible for the incorrect details. It also said that the details Mr N provided for the two transfers were different.

Mr N was dissatisfied with the bank's response and referred his case to us.

complaint not upheldWe asked the bank to provide us with the transfer request forms for both transactions. These showed that the beneficiary account details provided were different for each transfer. We noted that the first form requested a transfer to the beneficiary's account in Pakistan, while the second requested a transfer to the beneficiary's account in India.

We were satisfied that the bank had processed the first transfer according to the instructions it had received from Mr N - and that there was nothing in the information it had received from Mr N that should have alerted it to any potential problem.We concluded that the bank was not responsible for the accuracy of the details that Mr N had provided. We therefore did not require it to refund any of the loss that he incurred.

102/4consumer complains he is not informed that a transfer can happen instantly

Mr G went into his bank to make a payment of £1,000 to a recipient in eastern Europe. Unfortunately, the next day he realised that he had been caught up in a sophisticated scam. Mr G phoned his branch straightaway and asked for the transfer to be cancelled. He was informed that the transfer had already been made and that the bank would not be able to recall the money.

Mr G complained to the bank, saying he had not been told that the transfer would go through instantly. He said he would not have gone ahead with the transfer if he had known this. The bank told Mr G that it had processed his transfer correctly, and that after he had got in touch, it had tried its best to recall the money. Mr G decided to refer the matter to us.

complaint not upheldWe sympathised with Mr G, who had been the unfortunate victim of a scam. However, we did not agree that the bank had acted incorrectly. We established that the transfer had taken place in accordance with Mr G's instructions and had been completed routinely in a matter of minutes. There was no suggestion that Mr G had expressed any reservations to the bank, or asked about timing, before making the transfer.In light of what Mr G had told us, we did not consider that he would have acted differently if he had known that the money would be transferred immediately. Indeed, Mr G had told us that he had been pressurised by the beneficiary to make prompt payment.

We were satisfied that the bank had tried its best to recall the money. It had also tried several times to obtain further information and updates for Mr G, even though what eventually happened to the money was outside its control. We concluded that the bank had done nothing wrong, and that there was therefore no basis on which we would require it to reimburse the money that Mr G had lost.

102/5consumer complains she is not properly informed about her account balance before making a transfer

Miss D phoned her bank to check the amount of money she had in her business account. She was told that she had £1,500. On the same day, Miss D went into her local branch and completed a transfer request form, instructing the bank to send £500 to a supplier in the Middle East. She asked for it to be processed the following day. However, the transfer was not processed the following day because Miss D did not have enough money in her account.

Miss D complained to the bank that she had been given incorrect information and that the failed transfer had led to significant losses to her business. The bank responded by explaining that the balance she had been given over the phone would have been correct as at close of business on the previous day. Miss D felt that the bank had not made this clear. She referred her complaint to us.

complaint not upheldThe bank provided us with a recording of Miss D's phone call. We were satisfied that the bank had explained to Miss D that the balance was correct as at close of business on the previous day. In light of this, and given that Miss D had instructed the bank to process the transfer the day after she completed the form, we considered that it would have been reasonable for Miss D to have taken account of the other transactions that would go through her account. Under these circumstances, we did not uphold the complaint.

102/6consumer complains that an overseas transfer has an unexpected exchange rate applied

Mrs E wanted to transfer some money from her overseas account to her account in the UK. However, when the money arrived, it was less than she had expected because of the exchange rate that had been applied.

Mrs E complained to her bank. She said that the rate it had used was wrong because it differed from the "market" rate she had seen on a news website before making the transfer. The bank responded by saying that it had followed its procedures and applied its own exchange rate. Mrs E was still unhappy and referred her complaint to us.

complaint not upheldHaving looked at the evidence, we were satisfied that the bank had processed Mrs E's transfer correctly, using the exchange rate that applied at the relevant time. We explained that the exchange rate that Mrs E had seen on the news website would only have given an indication of the general rate available.

The actual rate that applies to an individual transaction will fluctuate during the day and will vary between banks due to a number of different factors.

On that basis, we did not consider that the rate applied to Mrs E's transfer could be described as "wrong" simply because it was different from a better rate she had seen stated elsewhere. So we did not uphold the complaint.

102/7complaint about bank not checking that account details match before processing an online transfer

Mr P used his internet banking service to transfer £1,000 to his daughter, who was away at university. A week later, the money had not reached his daughter's account. When Mr P queried this with his bank, he discovered that the money had gone into the account of an unknown third party. The bank told him that one of the digits of the account number he had entered had been wrong.

The bank was able to recall the money and transfer it to Mr P's daughter. However, Mr P complained to the bank, saying that it should have checked that the name and account number matched, and that the fact it had not done so had caused him significant inconvenience.

complaint not upheldWe explained to Mr P that the bank was not required to check that the name and the account number matched before processing his online transfer. Having looked carefully at the evidence, we were satisfied that the bank had displayed a clear on-screen message at the start of the online payment process, explaining that only a sort code and an account number would be used to process a payment - and not an account name. For this reason, we did not uphold the complaint.

102/8complaint about money transfer bureau releasing funds to third party without having explained security risks to consumer

Mrs L saw a car advertised on the internet for £2,500. She contacted the seller, who said he would be prepared to drive the car to her home in order for her to view it, but that she would first need to prove she had sufficient money to buy the car. The seller suggested that Mrs L send the money to her husband using a money transfer bureau, and email him (the seller) a copy of the receipt to show that the funds were available. He also offered to refund the transfer fee.

Mrs L had not made such a transfer before, so she completed a transfer request form with the help of her local money transfer bureau - having mentioned the purpose of the transfer. When she got home, she emailed the seller a copy of the transfer request form. Mrs L did not hear from the seller again. When her husband went into the money transfer bureau to collect the money, he was told that it had already been withdrawn by someone who had provided the necessary identification.

Mrs L complained to the money transfer bureau, explaining that the intended recipient was her husband and that he had not withdrawn the money. The bureau replied that Mrs L should not have released the payment details to a third party, and that she had been the victim of a sophisticated scam. Mrs L remained unhappy and referred her complaint to us. complaint upheld

We noted that the money transfer bureau said it was Mrs L's fault for sending a copy of the receipt - which contained payment details including the reference number which the beneficiary had to quote in order to get the money - to a third party.

However, there had been nothing printed on the receipt to warn a customer against doing this. The money transfer bureau insisted that Mrs M should have realised this was a scam because it had seen it performed "many times" recently. In light of this, we considered that the bureau could have done more to draw relevant fraud warnings to Mrs L's attention.

In the circumstances of Mrs L's case, we did not consider that she should have realised that an unknown third party would be able to use the receipt to withdraw the money she had sent to her husband. On that basis, we upheld the complaint and told the bureau to reimburse Mrs L with the full amount of the money she had transferred, together with suitable compensation for the worry and inconvenience this had caused her.

Mr B went online to transfer £150 to his mother's bank account. Because he had sent money to her before, he was able to click on her details from a list of recent transactions. Unfortunately, Mr B clicked the wrong recipient details and the money was transferred to someone from whom he had bought a second-hand computer.

Mr B contacted his bank immediately to see if he could recall the transfer, and was told that someone from the relevant department would call him back. Although he phoned the bank another three times that day, Mr B was unable to speak to someone who could help him until the following day. By this time, the bank told him that it could not recall his money.

Mr B complained to the bank. He said that he had not been prompted to check that the transaction details were correct, and that the bank had been unhelpful when he had told them about the mistake. The bank replied that its online transfer process was simple to follow and that Mr B ought to have been "more careful" when he made the transfer.

The bank also said that even if Mr B had been able to speak to someone in the right department sooner, it would have been unlikely that he could have got his money back.

Mr B was unhappy with this response, not least because he no longer had the contact details of the person to whom he had transferred the money. He referred his case to us.

complaint upheldWe listened to what both sides told us and reviewed the relevant facts of the case. This included viewing screenshots of the steps Mr B would have gone through to make the transfer.

We did not consider that the bank had given Mr B sufficient opportunity to check the transaction details. In particular, we noted that there was no "final confirmation" page.

In addition, we did not consider that the bank had handled Mr B's situation well. We established that had it acted more quickly, there was a good chance that it could have got Mr B's money back. As things stood, the bank was unable to explain why Mr B could not speak to the relevant person on the day he made the phone calls.

We therefore upheld the complaint and told the bank to refund Mr B £150, plus £75 compensation for the inconvenience it had caused.